RBS to pay bonuses totalling €1.47bn

Royal Bank of Scotland is to pay bonuses totalling £1.3bn (€1.47bn) to its investment bankers despite expectations of grim annual results tomorrow.

The payout is thought to have been given the green light by UK Financial Investments (UKFI), the body set up to manage the Government’s stakes in banks.

RBS, which is 84% taxpayer-owned after a string of bailouts, is expected to post losses of more than £5bn (€5.6bn) for the year to December.

But it is the bank’s controversial bonus pot that will prompt howls of outrage from the public as it comes despite the deficit and an expected admission that it has not met Government lending targets, which were laid out as part of the terms of its bail-out.

RBS boss Stephen Hester, who has waived his own payout for last year, has said the bank must give competitive bonuses to its key staff but that it would pay “the minimum we can get away with” to the investment bankers.

They will receive their bonuses in shares rather than cash and this could be subject to clawback at a later date. The only cash bonuses will be paid to those earning under £39,000 (€44,300), who will get a maximum of £2,000 (€2,270) in cash.

While the bank’s results are likely to make grim reading, its losses for 2009 pale in comparison with the £24.1bn (€27.4bn) shortfall for the year before – a UK corporate record.

The bank is thought to have suffered bad debts and write-offs of up to £13bn (€14.7bn) last year as a savage recession soured loans to businesses and homeowners.

As the economic shocks tore through other areas, investment banking is likely to be one of the few highlights in the results.

Mr Hester is engaged in a five-year turnaround plan for the beleaguered lender, aiming to return it to a healthy state so that the Government can recoup the £45.5bn (€51.7bn) it has pumped in to prop it up.

He hopes to return it to profit in 2011, but has warned that recovery will be painful and said the after-shocks from the recession “will take years to subside”.

Mr Hester’s role has also been to break up parts of the business that have attracted the attention of Europe’s Competition Commissioner in the wake of the huge levels of state support.

The bank will have to sell 318 branches of the former Williams & Glyn’s business in England and Wales and its NatWest branches in Scotland.

Its insurance business – including brands such as Churchill and Direct Line - is also on the block, as well as its global merchant services and its majority stake in the Sempra commodity trading business.

Under the terms of the Government bail-outs RBS and fellow part-nationalised bank Lloyds Banking Group agreed to lend £39bn (€44bn) to homeowners and businesses in the year to February as part of efforts to boost credit in the economy.

Both banks have argued that the appetite for loans has evaporated in the slump, but MPs have called for the Treasury to ratchet up the pressure to make the banks meet their pledges.

More in this Section

AM O’Sullivan PR takes top communications awardAM O’Sullivan PR takes top communications award

Dublin Port traffic back to 2016 levels due to Covid-19Dublin Port traffic back to 2016 levels due to Covid-19

Good day for Irish consumer companies as share prices riseGood day for Irish consumer companies as share prices rise

Ireland raises €700m in benchmark debt to fund Covid-19 crisis at lowest cost in history of StateIreland raises €700m in benchmark debt to fund Covid-19 crisis at lowest cost in history of State


Lifestyle

As those of us who love to have friends round are tentatively sending out invitations, we’re also trying to find a workable balance with necessary social distancing rules, writes Carol O’CallaghanTable manners: How to entertain at home post-lockdown

Helen O’Callaghan says asthma sufferers need to watch pollen levelsBreathe easy: Pollen tracker protects asthma sufferers

Testosterone levels drop by 1% a year after the age of 30, so should all middle-aged men be considering hormone replacement therapy to boost their mood and libido? asks Marjorie BrennanHow male hormone deficiency can impact both mood and libido

There are two biggies for the must-see lists this week: the final episodes of I May Destroy You, on BBC; and the first episode of The Plot Against America on Sky Atlantic on Monday/Tuesday.Scene & Heard: New TV shows and old bands

More From The Irish Examiner